Former leading New Zealand publisher and bookseller, and widely experienced judge of both the Commonwealth Writers Prize and the Montana New Zealand Book Awards, talks about what he is currently reading, what impresses him and what doesn't, along with chat about the international English language book scene, and links to sites of interest to booklovers.

Tuesday, February 26, 2013

Riggio Offers to Buy BN Stores, Subject to Negotiation

PublishersLunch

Following advance
notice Sunday night in the
WSJ, early Monday morning Barnes & Noble announced that Len Riggio
"notified the board...he plans to propose to purchase all of the assets of
the retail business"--comprising the BN superstores, and the BN.com web
site. "Riggio plans to make the proposal in order to facilitate the
company's evaluation of its previously announced review of strategic options
for the separation of its investment in Nook Media."

The price
is subject to negotiation with the board, and "is currently contemplated
to be comprised primarily of cash consideration and the assumption of certain
liabilities of the company." One big outstanding liability is a $127.25
million note that BN still owes to Riggio for the purchase of Barnes &
Noble College in 2009. (The note is due in 2014.) "Riggio would provide
the equity financing for the transaction and undertake to arrange any debt
financing required for the transaction." Directors David Golden,
David Wilson and Patricia Higgins are forming a special committee to consider
Riggio's offer, with Evercore Partners as their financial advisor and Paul,
Weiss, Rifkind, Wharton, & Garrison as their legal advisor.

The timing
of the announcement, right before what has already been warned to be a
disappointing set of quarterly results is interesting. Clearly the effect--and
perhaps the intent--is to support the BN stock price ahead of the bad earnings.
Indeed, shares more than a dollar, or a about nine percent, in Monday morning
trading, after a suspicious burst in the last two hours of trading last Friday.
Riggio has potentially competing interests at play, since he controls roughly
38 percent of Barnes & Noble stock, but presumably would want to pay as
little as possible to buy the BN store business. The biggest "win"
for Riggio is if taking the stores private lifts the public shares to value the
Nook business closer to the $1.79 billion valuation that BN, Microsoft and
Pearson have placed on it.Filing

And from Shelf Awareness:

B&N: Riggio Exploring Buyout

Leonard Riggio, Barnes & Noble's chairman and largest shareholder, with 30% of the company's common stock, is exploring the possibility of buying out B&N's bookstore chain. In a filing with the SEC today, Riggio notified B&N's board of directors that he "plans to propose to purchase all of the assets of the retail business of the Company. The retail business would include, among other things, Barnes & Noble Booksellers, Inc. and barnesandnoble.com; and would exclude NOOK Media LLC (comprising the digital and College businesses)."

According to the filing, the purpose of the proposal is "to facilitate the company's evaluation of its previously announced review of strategic options for the separation of its investment in NOOK Media LLC."

In its initial response, B&N's board of directors said the process of evaluating the proposal and negotiation of any transaction will be overseen by a strategic committee of independent directors: David G. Golden, David A. Wilson and Patricia L. Higgins, who is chair of the strategic committee. Evercore Partners will serve as its financial adviser and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal adviser.

The board also cautioned that "there can be no assurance that the review of Mr. Riggio's proposal or the consideration of any transaction will result in a sale of the retail business or in any other transaction. There is no timetable for the strategic committee's review."